Last night I mentioned saving and value adding to improve the life of my family. Saving is obviously a good process that everyone should practice, but generating income is vital for it to be effective. After all, just like the bee in the image below,
Have to collect something, in order to have something to save.
And we are collectors by nature. And we are holders.
We value what we create and as such, try to hold onto it, which should mean that we are pretty good at saving money, but that is not the case. This I put down to "money" being conceptual, where while we might generate it, it doesn't feel like it is ours until it has been converted into something we can hold physically.
Fiat is never ours.
But, this means we are more inclined to spend what we earn on something that is physical, which sets us up to buy things that aren't necessarily value generating. And, we will justify some of these purchases by applying values that might not be there.
For instance, if we were lumberjacks, buying a better axe to more effectively cut down trees (or a chainsaw), is an investment purchase with a return. Tools of the trade. However, buying a television as a tool to relax, might not bring the relaxation that justifies the expenditure, over say, a pack of cards, or a pack of condoms.
Get wood.
Anyway...
So, what we generally end up doing is trading our income to hold things that don't actually generate value for us, but we think they do, largely not exploring if this is actually the case or not, or alternatives that might be more effective at meeting our needs. But, we get the sense of "ours" and we will hold.
But remember, money isn't ours. So saving it, doesn't actually meet our programmed holder mechanisms. It doesn't satisfy us. Not only that, we also have a sense that money in the bank isn't doing anything, so we aren't getting the dopamine kick of having it just sit there. Also, we should know by now that the inflation rate is far above what cash is earning, so having money sitting there is going to be a cost anyway.
However, lots of people do this, because they have been told they should have money in the bank saved. And, for those people, it could actually feel that the money is theirs, so the holder mechanism kicks in and then, it is very hard to spend that money.
Sounds good?
No. Because investing is always an expenditure. Money (value) has to be traded for something with the hope that the future value of that thing is higher than the money would have been worth. Spending 100 dollars to buy X today, speculating that X will be worth 200 in the future, whilst holding the 100 would leave it the same, or due to inflation, worth even less as the purchase power decreases. If we can't let go of what we are holding however, we also can't invest into generative activities.
Money has no value.
We talk about money having value, but it is very much like, "knowledge is power" - it is only powerful in how it can be used, not in simply having it. Money only has value in the form of what it is spent on. Every business model on earth is based on this concept, with each trying to convince that whatever product they are selling, is worth the tradeoff for the money, which they then use to convert into something that generates for them.
For instance, look at the 10% rule where people are influenced to save 10% of their income. However, that 10% is put into a bank that is used to generate income for the bank at a higher rate than the interest being paid to the person who deposited it. This is their business model. Not only this, while we are spending our disposable income on the various business models that make us believe they are worth it, the business of banks is taking anything they are generating in profits and investing it further, to compound earning. Even the people who are shareholders getting income from those models, are going to spend the majority of their disposable income on earning more with it.
There is no catching them.
What I have found over the last years however, is that crypto seems to be something that people feel they own, as if it is a product itself and something worth holding onto, whilst still offering the potential to increase in value. This is mindset shift, as while it is a currency in the sense it can be spent on goods and services, it is also treated like a physical resource. And, because it can be put to work, it becomes a tool of the trade, like a new axe.
This is a mindset shift that still triggers our holder mechanisms, but gives us a more tangible view of what has value and what doesn't. Most crypto people are more value-driven in the sense that they are going to intentionally put their crypto to work for them, one way or another. And, when they spend crypto, they are more likely to think about the cost of the expenditure, and what they are getting for the trade.
And, this is hopefully going to change the global economy, as people not only take more responsibility over their financial wellbeing, but also create goods and services that are outside of the normal economic processes. When people think more about the "true value" of what they purchase, they will likely change what they are willing to trade for it.
This also changes what we save. Rather than being hoarders of junk, we become collectors of value. This doesn't mean that everything will be financially generative of course, but it means that what we do collect will be worth more to us, rather than frivolously bought because a business model convinced us it was "worth it".
How much do you have in your house that was worth it when you bought it, but you have barely used?
Spring cleaning?
Other than wiping the dust and getting rid of clothes that no longer fit, how much should we actually be getting rid of each year? It is like the difference in packaging material volume between eating healthy foods, and processed foods. It is an enormous difference.
Healthy foods don't come with advertisements.
The problem with having a holder mentality, is being able to trade what we are holding for something of greater value, and this is especially hard when it comes to investing, because there are no guarantees as to what will have a greater future value. This means that saving seems the better option, especially over spending on products that generate nothing. And it is better, but also potentially just as useless, as it gets whittled down through inflation, just over a long time period.
A new car will lost 30% as it is driven off the lot. The same value in cash will lose it over the space of about three years.
It is still a loss.
There is likely no "perfect" way to handle our financial lives, but I do think that we have to consider our own personal behaviors and in order to do that, understand the conditioned and innate mechanisms in play. It is these triggers that businesses use to convince us and it is these that make our behavior predictable and leverageable through the business models. Knowing ourselves means, we can leverage them too.
Awareness is a tool of the trade.
Taraz
[ Gen1: Hive ]
